Choosing financial products and services that are right for you

Learn how to choose financial products and services that fit your needs. Compare options for daily banking, borrowing, saving, investing and insurance. Review borrowing options for different needs.

Comparing your options

Financial institutions offer many types of products and services. Before you choose one, check if it meets your financial needs.

Consider:

• how you’ll use it
• the benefits
• the fees and rates that apply, if any
• if it’s right for you

Managing day-to-day banking

You may need a place to deposit income, like your paycheque, and pay for regular purchases. Deposit accounts are usually best for day-to-day transactions.

Deposit accounts let you:

• deposit money
• withdraw money
• pay bills
• make other transactions, like electronic transfers

Chequing accounts

A chequing account is for day-to-day transactions. It usually has lower transaction fees than a savings account, but it may earn less interest or no interest.

Chequing accounts usually include:

• a debit card to access your money at an automated teller machine (ATM) and make purchases in-store and online
• cheques
• preauthorized debits (PAD)
• Interac e-Transfer®

Learn more about chequing accounts.

Savings accounts

Many people use a savings account with a chequing account for daily transactions. A savings account usually pays interest on the money you keep in the account.

Learn more about savings accounts.

Low-cost and no-cost accounts

Certain financial institutions have signed an agreement with the federal government to offer low-cost accounts with basic features.

Find out if you’re eligible for a low-cost or no-cost account.

Credit cards

A credit card may work for day-to-day transactions. You should only do this if you pay back your balance in full by the due date.

Credit cards let you pay for goods and services on credit, and many offer rewards or other benefits.

You may use a credit card to:

• pay bills
• make purchases in-store, online and by phone
• put a hold on a purchase, for example for a hotel room
• set up automatic bill payments, like your phone or a subscription
• get a cash advance from a branch or ATM, usually at a higher interest rate

Your credit limit is the maximum total amount you may use. When you make a purchase, your available credit goes down. When you pay it back, that credit becomes available again. This is revolving credit.

Your financial institution charges interest if you don’t pay your full balance by the due date. You must pay the minimum amount on your statement by the due date.

Learn more about choosing a credit card.

Borrowing money to pay for something specific or to consolidate your debts

You may need to borrow money for a specific purchase, like:

• a property renovation
• an appliance, like a fridge or stove
• a car
• post-secondary education

You may also borrow money to pay off some or all your debts. For example, you may use a loan to reduce or pay off credit card debt. This is debt consolidation.

A loan lets you borrow money and pay it back over time. You repay the full amount, plus interest and any applicable fees, through regular payments called instalments.

Financial institutions usually let you make extra payments without a penalty. This helps you pay down your loan faster.

Learn more about debt consolidation.

Personal loans

You usually get a personal loan for a specific purchase or to combine other debts. They’re also called long-term financing plans, instalment loans and consumer loans.

Most personal loans range from $100 to $50,000, with a term of 6 to 60 months.

Learn more about personal loans.

Car loans

A car loan is a personal loan to buy a car or another motor vehicle. Your financial institution may offer car loans.

Most car dealerships also offer car loans. You may apply for a loan at the dealership.

A dealership may arrange financing for you with:

• a financing division of the manufacturer
• a financial institution, like a bank or credit union
• an independent financing company that specializes in car financing

Car dealerships may also offer lease options. These aren’t usually available through your financial institution.

Learn more about shopping around for auto-financing.

Student loans

Student loans can help you pay for post-secondary education. The Government of Canada offers student loans. With this type of loan, you don’t make payments while you’re a full-time student.

Provincial and territorial governments also offer student loans with similar advantages.

Learn how to apply for student aid with your province or territory.

Most financial institutions also offer student lines of credit or personal loans for education. With these options, you usually need to make payments even if you’re a full-time student.

Contact your financial institution to learn more about financing options available to students.

Learn more about the National Student Loans Service Centre (NSLSC).

Learn more about the Canada Student Grants and Loans.

Borrowing money for expenses or emergencies

You may need to borrow for expenses or for an unexpected situation, like an emergency. Compare your options before you borrow.

Some products, including credit cards, usually have higher interest rates than other options. If you can’t pay your balance in full each month, your costs may be much higher.

Overdraft protection

Overdraft protection covers the amount of a transaction when you don’t have enough money in your account. It may be a good choice for your chequing account if you use it responsibly.

Learn more about overdraft protection.

Personal lines of credit

A personal line of credit usually has a lower interest rate than a credit card. It may be a good option to cover your expenses if you use it responsibly.

A line of credit lets you borrow money up to the credit limit. You don’t have to use the money for a specific purpose. You may use as little or as much as you need.

You only pay interest on the amount you borrow. Most financial institutions charge interest from the date you start using the money. You may pay back what you owe at any time.

Financial institutions offer two types of lines of credit:

• secured line of credit: the financial institution uses an asset as collateral
• unsecured line of credit: the financial institution doesn’t use assets as collateral

Learn more about lines of credit.

Home equity lines of credit

A home equity line of credit (HELOC) is a type of secured credit that uses your property as collateral. It can help cover expenses, including larger expenses like property renovations.

A HELOC usually has a lower interest rate than other loans or lines of credit. Your credit limit depends on the equity in your property and the type of HELOC you choose.

Learn more about home equity lines of credit.

Student lines of credit

You may use a student line of credit for post-secondary education.

You may also use it for basic expenses, like:

• tuition
• books
• housing

Learn more about student lines of credit.

Reverse mortgages

A reverse mortgage lets you borrow based on the equity in your property. You may borrow up to 55% of your property’s value. You usually need to be 55 years of age or older to qualify.

You don’t need to sell your property. You don’t need to make payments until the loan is due.

A reverse mortgage may help you pay for your expenses. However, interest costs build up over time.

The interest is usually higher than for a home equity line of credit (HELOC) or a mortgage.

You repay the loan and accumulated interest when:

• you move out of your property
• you sell your property
• the last borrower dies

Learn more about reverse mortgages.

Borrowing money to buy a property

When you buy a property, you usually pay part of the purchase price up front. This is your down payment. You usually need a loan from a lender to cover the rest.

Mortgages

A mortgage is a loan to help pay for your property. It’s a legal contract between you and your lender. It’s secured by a property, like a house or condo.

With a mortgage, you:

• need to make a down payment
• borrow a large amount, often several hundred thousand dollars
• secure the loan with a property
• usually need to renew your contract several times before you pay the full balance

You may also:

• need to pass a stress test to know if you can pay a higher interest rate
• owe a balance at the end of your term
• pay a penalty if you break your contract

Learn more about choosing a mortgage that’s right for you.

Other ways to borrow money

You may be able to get a loan by using your assets or your next paycheque as collateral. Your assets may include your car.

These types of loans are a very expensive way to borrow. Your financial institution may be able to help. Contact them to find out what options are available to you.

Car title loans

A car title loan lets you borrow money if you have poor credit and own a vehicle. You use your car as a promise that you’ll repay the money. You keep using the car while you have the loan.

Title loans are usually short-term, from 3 months to 3 years. You usually pay high interest rates and fees.

Banks and credit unions don’t offer title loans. Alternative lenders do.

If you miss payments, you could lose your car.

Learn more about title loans.

Payday loans

A payday loan is a short-term loan with high fees. It’s also called a high-cost loan or high-cost credit.

With a payday loan, you may borrow up to $1,500. You may have up to 62 days to repay it.

Payday loans are different from traditional loans because:

• they’re for a short period, usually weeks
• you usually don’t need a credit check
• the lender charges a flat fee instead of interest when you pay on time
• only payday lenders offer them
• the lender sets up your payments around your payday schedule

You must repay some or all the loan by your next paycheque. Missing the deadline means more fees and interest.

Learn more about payday loans.

Saving money for a specific goal

You may want a savings account to help you save for a specific purchase, like:

• a down payment for a property
• a car
• a vacation

You may also use a savings account for emergencies, like:

• a family illness
• a job loss
• urgent property repairs
• natural disasters

Learn more about setting up an emergency fund.

Tax-Free Savings Accounts

You may use a Tax-Free Savings Account (TFSA) for short-term and long-term savings. Some TFSAs may hold a wide range of investment products. Your investments grow tax-free while in the account.

You don’t pay tax on investment income earned inside a TFSA, including:

• interest
• dividends
• capital gains

You also don’t pay tax when you withdraw money from your TFSA.

Know your TFSA contribution limit. Going over it means paying a penalty.

To build TFSA contribution room each year, you must be:

• at least 18 years old
• a Canadian resident

Your contribution room increases each year, even if you don’t contribute. The Government of Canada sets the increase amount. You may find your contribution room amount on your notice of assessment.

Learn more about Tax-Free Savings Accounts.

Check how to get notices of assessment (NOA or NOR).

Registered Education Savings Plans

A Registered Education Savings Plan (RESP) is a savings plan. It’s used to save for a beneficiary’s education after high school. For example, a parent may save for their child (the beneficiary).

A RESP has both a yearly and lifetime contribution limit.

RESP advantages include:

• your money grows tax-free while in the plan
• the beneficiary may use the money for other education costs, not just tuition
• the beneficiary may get government grants to help grow the savings

An RESP can help you save for a child’s education.

Learn more about Registered Education Savings Plans.

Retirement savings options

You have several options that may help you save for retirement, like:

• Registered Retirement Savings Plans (RRSP)
• Tax-Free Savings Accounts (TFSA)
• other personal savings and investment products

Learn more about retirement planning.

Investing your money

Financial institutions offer many investment products. You may hold investment products in certain accounts and registered plans, like your TFSA or RRSP.

Investment products

Examples include:

• annuity
• bond
• exchange-traded fund (ETF)
• guaranteed investment certificate (GIC)
• mutual fund
• security
• segregated fund
• stock
• Treasury bill (T-bill)

Learn more about the basics of investing.

Getting insurance

Insurance may help cover costs if something unexpected happens to you or your:

• family
• health
• property
• car
• job
• pets
• belongings

Insurance products

There are many insurance products for different circumstances.

Learn more about how insurance works.

Related links

• Budget Planner
• Life events and your money
• Financial rights and responsibilities